India rejects sanctioned Russian LNG amid West Asia energy crunch, China keeps buying: Report

India has declined Russia’s offer to sell liquefied natural gas (LNG) cargoes under US sanctions, even as China continues purchasing both sanctioned and unsanctioned Russian LNG supplies, according to a Reuters report citing sources familiar with the matter.

The decision underscores New Delhi’s cautious approach as it grapples with rising energy security concerns triggered by the conflict in West Asia while trying to avoid the compliance risks associated with sanctioned LNG cargoes.

According to the report, India informed Russia during talks last month that it would not purchase LNG sourced from sanctioned projects such as Portovaya LNG and Arctic LNG 2.

The issue was discussed during Russian Deputy Energy Minister Pavel Sorokin’s visit to India on April 30, when he met Union Petroleum and Natural Gas Minister Hardeep Singh Puri and other officials, the report said.

The discussions were part of continuing energy negotiations between the two countries, with Sorokin expected to return to India in June for further talks.

LNG cargo stranded after India refuses deal

India’s refusal to accept sanctioned Russian LNG has already disrupted at least one shipment.

A cargo from Russia’s sanctioned Portovaya LNG plant in the Baltic Sea has been left unable to discharge after talks with Indian buyers stalled, the Reuters report said.

The LNG tanker Kunpeng had indicated Dahej LNG terminal in Gujarat as its destination in mid-April, according to LSEG shipping data previously cited by Reuters. The vessel is now near Singaporean waters and is no longer broadcasting a destination.

The report said the shipment carried documentation suggesting the LNG was non-Russian, but the vessel was still traceable.

India’s Ministry of Petroleum and Natural Gas and Russia’s embassy in New Delhi did not immediately respond to Reuters’ requests for comment.

Why India is avoiding sanctioned LNG

India has emerged as one of the largest buyers of discounted Russian crude oil since the Ukraine war began, but LNG shipments pose a different level of risk.

Unlike crude cargoes, which can be rerouted through ship-to-ship transfers and blended supplies, LNG cargoes are easier to monitor through satellite tracking systems, making sanctions compliance more difficult to circumvent.

The United States earlier this year tightened sanctions on Russian LNG export projects, including Portovaya LNG and Arctic LNG 2, as part of measures linked to Moscow’s war in Ukraine.

“Russia is keen to sell, but Indian companies are cautious,” Reuters quoted one of the sources as saying.

India remains open to purchasing authorised Russian LNG cargoes, the report added, although most non-sanctioned Russian LNG volumes are already committed to European buyers under long-term contracts.

China, however, continues to import both sanctioned and non-sanctioned Russian LNG cargoes, according to the report, reinforcing Beijing’s role as a key buyer of Moscow’s energy exports despite Western restrictions.

Energy security concerns grow

The development comes as India faces increasing pressure on energy supplies due to disruptions in shipping routes across West Asia.

Before tensions escalated around the Strait of Hormuz, India met nearly half of its gas demand through imports, with around 60 per cent of those cargoes passing through the critical waterway. More than half of India’s crude oil imports also transit through Hormuz.

Russia is simultaneously pushing for broader long-term supply agreements with India covering LNG and fertilisers such as potash, phosphorus and urea, the Reuters report said.

Amid the worsening energy situation, Prime Minister Narendra Modi on Sunday
urged citizens to conserve fuel and foreign exchange by cutting unnecessary imports, reducing foreign travel and working from home where possible.